AT&T buys NorthPoint assets

AT&T said Thursday that it has won bankruptcy court approval to buy the assets of NorthPoint Communications, in a bid to strengthen its consumer broadband Internet and local phone services.

Along with Covad Communications and Rhythms NetConnections, NorthPoint was once one of the market's most promising high-speed Net start-ups focused on providing speedy Net access using phone lines. But funding and revenue shortfalls threw it into instability, and the dissolution of a merger deal with Verizon Communications in January proved the last straw.

The AT&T deal will see the company's customers dispersed for good.

Ma Bell agreed to buy "substantially all" of NorthPoint's assets for $135 million, the companies said. The phone company will use NorthPoint's networks to offer both high-speed Net service and voice telephone service, a spokeswoman said. AT&T is not taking over NorthPoint's customers along with the network, the companies said.

"We've been saying for a long time that DSL is a key part of our consumer strategy," AT&T spokeswoman June Rochford said. This purchase "gives us a great infrastructure in areas where there are lots of consumers."

The purchase is being made by AT&T's consumer division, as opposed to what will become the separate AT&T Broadband after the company's breakup. That raises the prospect of two AT&T companies competing against each other with DSL and cable modem high-speed Net service. The company has not yet released details on how it will brand services after its breakup.

The NorthPoint acquisition is expected to close within 60 days. A spokesman said that some, but not all, of the company's employees will be retained. AT&T has not yet determined whether it will continue NorthPoint's largely wholesale strategy or pursue retail sales, the spokesman said.

In a letter posted on NorthPoint's Web site, Chief Executive Liz Fetter warned that "cessation of services to our customers and the complete shutdown of our network is imminent."

The company is negotiating with Internet service provider partners for funding to support service while customers move to new DSL providers. But if this funding does not come through within the next few days, the company will begin shutting down the network, she said.

The company has stopped taking new orders and will cease all new service installations, she said. Existing customers should do what they can to find a new service provider as soon as possible, Fetter added.

"We are disappointed and regret that we are unable to continue to provide you with services," Fetter wrote. "I thank you for your past business and for your support of NorthPoint during these last few difficult months."